Gilded Age

The Gilded Age was a period of rapid economic growth and technological innovation in the United States beginning in the latter half of the 19th Century and extending into the early 20th Century. During this time per capita income and living standards were raised dramatically. Infant mortality fell steadily and life expectancy was extended by many years. It was during this period of growth that the economy in the U.S. overtook that of Great Britain to be the world's largest.

In the years following "Reconstruction" in the southern U.S., the federal government's role in the economy was minimal relative to contemporary life in America. There was no income tax, no central bank, and no military-industrial-complex; the largest federal program at the time was the U.S. Postal Service. This, coupled with a rapidly expanding population, due in large part to increased immigration, meant that sufficient capital existed for such growth.

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Chicago World's Fair

The 1893 World's Fair was held in Chicago, Illinois, and for the first time, the public was treated to electrical lighting. Never before had mankind been able to press a button and have light, and here several private contractors vied for the opportunity to light serve the public. Also for the very first time, fair-gowers were treated to the Ferris wheel, a remarkable innovation seen at every carnival and fair to this day. Jeffrey Tucker describes a number of other luxury goods at the World's Fair, including the earliest forms of Jazz Music and motion pictures[1].

The Robber Barons

During this time the so-called Robber Barons established their businesses and greatly expanded the standard of living of millions of people across the globe. Among them was James J. Hill, the owner of the Great Northern Railroad, who was able to build a transcontinental line entirely without government subsidy. He carefully planned the routes in order to eliminate waste, and found creative ways to cut operating costs in order to provide cheaper fares and freight fees[2].

John D. Rockefeller started Standard Oil, diligently looking for ways to improve efficiency and cut costs. During the period from 1869 to 1874 the price of oil dropped by more than two thirds. The success of Standard Oil can be attributed in large part to Rockefeller's corporate structure of "vertical integration." This means that a single firm performs many tasks which are often outsourced, as a way of cutting costs. For instance, Standard Oil produced many of its own tools and other physical capital. The method is not always effective, but in Rockefeller's case it paid off handsomely[3].